Avant Money launches a new mortgage today from < 2%

pumba

Registered User
Messages
26
It isn’t really.

If you’re going to lend at 1.95% into a market where it’s nigh on impossible to enforce security, it’s logical to try and manage other risks such as the size and liquidity of the relevant housing market.

People from the back of beyond never seem to want to accept this, but houses outside of the main urban centres just aren’t as desirable from a lending perspective; typically harder to value and typically harder to sell.
That answer though is one size fits all because there are areas outside of Dublin and the main cities which are pockets of houses which are easy to value because they always maintain their value and are easy to sell (Long-standing sought after/desirable areas). That policy completely ignores this fact and just takes the easy option but by doing so they are losing out on some very reliable customers
 

Brendan Burgess

Founder
Messages
41,748
That policy completely ignores this fact and just takes the easy option but by doing so they are losing out on some very reliable customers
Hi pumba

But there is plenty of business for them in the main centres. They would have to assess each of these pockets separately and that would not justify the potential return.

Don't forget that they are just a month or so in the market. They may well extend it over time.

Brendan
 

Gordon Gekko

Frequent Poster
Messages
4,549
That answer though is one size fits all because there are areas outside of Dublin and the main cities which are pockets of houses which are easy to value because they always maintain their value and are easy to sell (Long-standing sought after/desirable areas). That policy completely ignores this fact and just takes the easy option but by doing so they are losing out on some very reliable customers
Why bother though?

People seem to think that these guys are fulfilling some sort of public service. They’re not.

If I was lending at 1.95% into this market, I wouldn’t touch anything outside of the main urban centres, I wouldn’t touch apartments, and I wouldn’t lend to anyone with even a tangential link to a Covid-related business.

I have heard stories of lenders looking at the accounts of the employer of a potential borrower and turning them down solely on the basis of the business losing money. Proper order. Rates at these levels imply minimal risk. Avant Money should only lend to “super prime” cases, otherwise they are mispricing risk.
 

Banquo

Registered User
Messages
40
Perhaps we are moving toward a truly differentiated market whereby banks will price more on the credit risk of the individual and the property. It will suit some more than others.
 

cuttothechase

New Member
Messages
3
There are lots of people living outside the bigger urban areas that are low risk customers. Avant should look at each case individually and assess the level of risk that's involved. Of course they can lend to whoever they want, but they are certainly limiting their market. An individuals circumstances and situation is more importance than the exact location of their property. That should not be the one and only criteria they take into account. As previously mentioned one size does not fit all.
 

Gordon Gekko

Frequent Poster
Messages
4,549
There are lots of people living outside the bigger urban areas that are low risk customers. Avant should look at each case individually and assess the level of risk that's involved. Of course they can lend to whoever they want, but they are certainly limiting their market. An individuals circumstances and situation is more importance than the exact location of their property. That should not be the one and only criteria they take into account. As previously mentioned one size does not fit all.
With respect, no there aren’t, and in any event how would one go about building a business based on exceptions?

No creditor wants to have to enforce on the underlying borrower; the first thing you look at is the security. And despite the protestations of people who don’t live in the city, a spectacular €700k property in the middle of nowhere is substantially less attractive to a bank than an ugly and mundane €700k semi-detached in Dublin. It’s all about the liquidity of the market.
 

newirishman

Frequent Poster
Messages
803
There are lots of people living outside the bigger urban areas that are low risk customers. Avant should look at each case individually and assess the level of risk that's involved. Of course they can lend to whoever they want, but they are certainly limiting their market. An individuals circumstances and situation is more importance than the exact location of their property. That should not be the one and only criteria they take into account. As previously mentioned one size does not fit all.
Spending a lot of time and effort to do a detailed, individual risk assessment for properties or potential customers that are outside your defined, low risk, profiles is exactly what you don’t want todo if your target is to provide low interest rates.
you don’t care about losing out on a small number of potentially solid customers when the hassle of assessing them is too big, and risk is less manageable. You don’t care about creating a huge market share, you want to leave the more hassle business to the competition.
They are in the market to make money not to serve the public.
 

WizardDr

Frequent Poster
Messages
1,232
I may be losing it but what Variable Rate are Avant offering? Or what is the variable rate at end of Fixed Rate? Or are they saying another fixed rate at end?
 

Brendan Burgess

Founder
Messages
41,748
Hi Dr

Here are the variable rates

< 70% LTV : 2.5%
>70% LTV: 2.75%

If you fix for 3 years with Avant, the market will be very different at the end of the three years.
If you fix for 7 years, it will be different again.

Brendan
 

WizardDr

Frequent Poster
Messages
1,232
Thanks BB :) - there is no tracker element this just an LTV rate?

Would the Fixed Rate portion expire exactly on anniversary?


W
 

PolkaDot

Frequent Poster
Messages
340
I made some enquiries about applying to Avant. The broker flagged to me that the sector I work in would probably be viewed as a risky one by Avant (Covid impact). So to prevent me potentially wasting time on an application, the broker put in an initial call to Avant to see if they would consider my application based on my initial details.

Got a call back from the broker today to indeed confirm that at the moment Avant wouldn't consider me because of the sector I work in. Suggested I come back again in a few months to see if their view has changed.

Just sharing this as I think it's a clear example of how Avant are probably going to only consider very low risk applicants. I'm in a permanent job with a good salary and no other debt. But simply based on the industry I'm in, they're not willing to consider me just yet. For others thinking of applying, before you go to all the hassle, maybe get the broker to confirm you're not going to be wasting your time.
 

Protocol

Frequent Poster
Messages
3,174
Thanks.

Now we know they are being careful with location of house and occupation of borrower.

(I'm not complaining about this, it's just good to know)

Whereas the CEO on launch day more or less rejected claims that they would "cherry-pick".
 

Brendan Burgess

Founder
Messages
41,748
For others thinking of applying, before you go to all the hassle, maybe get the broker to confirm you're not going to be wasting your time.
It's not just hassle. Many of the brokers charge an application fee.

I have no problem with Avant cherry picking in country where there is no sanction for people who don't pay their mortgages. But it would be helpful if they specified what those cherries currently are.

Brendan
 

banjopotato

New Member
Messages
3
Not sure if this is standard in the current context (or outside of it), but the Avant loan offer form has the following as a "Special Condition":

Prior to draw down, the Borrowers must each provide a payslip confirming no negative changes to their employment since the original application was assessed. This payslip must be dated within 4 weeks of the date of draw down.
 

PolkaDot

Frequent Poster
Messages
340
Not sure if this is standard in the current context (or outside of it), but the Avant loan offer form has the following as a "Special Condition":
If you think about it, it's just prudent, good practice and common sense if you're a lender. I was always baffled by the way AIB were so fussy and difficult in originally approving me for a mortgage when I first bought my house (asking for extra paperwork etc etc), yet 6 months after getting approval, when it eventually came to drawing down, they did not look for any confirmation whatsoever that my employment or financial situation had not changed materially. Crazy really. I could have lost my job one week after getting approval yet would still have been able to draw down the mortgage!
 
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